Problem 5-2A (Algo) Preparing journal entries for merchandising activities LO P1, P2

Prepare journal entries to record the following merchandising transactions of Lowes, which uses the perpetual inventory system and the gross method.

August 1	Purchased merchandise from Aron Company for $8,000 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1.
August 5	Sold merchandise to Baird Corporation for $5,600 under credit terms of 2/10, n/60, FOB destination, invoice dated August 5. The merchandise had cost $4,000.
August 8	Purchased merchandise from Waters Corporation for $7,000 under credit terms of 1/10, n/45, FOB shipping point, invoice dated August 8.
August 9	Paid $260 cash for shipping charges related to the August 5 sale to Baird Corporation.
August 10	Baird returned merchandise from the August 5 sale that had cost Lowes $500 and was sold for $1,000. The merchandise was restored to inventory.
August 12	After negotiations with Waters Corporation concerning problems with the purchases on August 8, Lowes received a price reduction from Waters of $700 off the $7,000 of goods purchased. Lowe's debited accounts payable for $700.
August 14	At Arons request, Lowes paid $150 cash for freight charges on the August 1 purchase, reducing the amount owed (accounts payable) to Aron.
August 15	Received balance due from Baird Corporation for the August 5 sale less the return on August 10.
August 18	Paid the amount due Waters Corporation for the August 8 purchase less the price allowance from August 12.
August 19	Sold merchandise to Tux Company for $4,800 under credit terms of n/10, FOB shipping point, invoice dated August 19. The merchandise had cost $2,400.
August 22	Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications. Lowes gave a price reduction (allowance) of $800 to Tux and credited Tux's accounts receivable for that amount.
August 29	Received Tuxs cash payment for the amount due from the August 19 sale less the price allowance from August 22.
August 30	Paid Aron Company the amount due from the August 1 purchase.